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At the end of the day, Big Brother ALWAYS wins. 
Imminent and severe market correction
- Thread starter Uncle Festivus
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At the end of the day, Big Brother ALWAYS wins.
not if everyone has a gun?
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deleted - wrong thread
Glen48
Money can't buy Poverty
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Just when you think things a good some else comes along.
From Patrick .net
Lehman Brothers, the bust investment bank, triggered one of the biggest corporate debt defaults in history yesterday as it emerged that the US Federal Reserve is harbouring grave concerns about whether Washington’s $700 billion (£413 billion) bailout fund will avert a financial meltdown.
An auction of Lehman’s bonds yesterday determined that the bank’s borrowings were worth only 8.625 cents on the dollar. The valuation leaves the insurers of the debt a bill of about $365 billion. It is not clear whether the insurers, which are required to settle the bill in the next two weeks, will be able to pay – a development that could further undermine increasingly stressed capital markets.
The $365 billion default came as stock markets around the world suffered one of their worst days since the crash of 11 years ago. Panicking about the prospect of global recession, the FTSE 100 index of leading shares in London crashed within seconds of opening, losing 8.9 per cent of its value, its worse fall since October 1987.
The index recovered to close down 225 points, marking a 5 per cent decline, but more than a fifth was wiped off London shares this week alone. Issues in New York fluctuated wildly as the Dow Jones industrial average slumped by 312.14 points at lunchtime before closing at 8,451.19, down 128.00. Both markets had been scared by losses in Tokyo, where the Nikkei lost 10 per cent of its value.
Related Links
* Lehman staff will make millions to unwind trades
* Fuld denies responsibility for Lehman collapse
Amid the mayhem across the world’s stock markets, senior Fed officials now doubt whether Washington’s bailout fund will work unless it is launched in some form in the next two weeks.
The Times has learnt that central bankers in America are anxious that if the Treasury is not able to accelerate the speed at which it launches its rescue scheme, it will have no effect. At the moment, the Treasury, which controls the fund, is working to a five-week schedule to get the rescue package up and running. Under present plans, the bailout fund is not expected to buy its first distressed mortgage-backed bonds until after the US elections on November 4.
It is understood that the Fed believes that this will be too late to help the banks that are suffocating under market conditions. Credit markets have frozen up and many banks have been cut off from being able to borrow from one another.
Mr Paulson’s bailout fund is designed to buy up distressed bonds held by troubled banks. This week the former chairman of Goldman Sachs appointed Neel Kashkari, one of his protégés at the Wall Street bank, to run the fund. Mr Kashkari had already been working closely with Mr Paulson during the negotiations over the passage of the “troubled asset relief programme” on Capitol Hill.
Mr Paulson is also considering a range of other forms of financial assistance, which include the Treasury using taxpayer funds to buy stakes in Wall Street banks. Under such a plan, the cash received in return for the shareholding would provide much-needed capital for the banks.
Lehman’s corporate debt default promises to increase the stress across global credit markets. Sean Egan, of the Egan-Jones ratings agency, said: “This is a killer. Lehman said a month ago that it was in terrific shape and now you can’t even get ten cents on the dollar for its debt.
“It underscores the deep structural flaws in our financial system, knocks confidence in the financial markets and raises the cost of capital. It also demonstrates that we are experiencing not only a crisis of confidence, but a crisis.”
About 350 banks and investors are thought to have insured an estimated $400 billion of Lehman’s debt through complex derivatives, known as credit default swaps. These include Pacific Investment Management, the manager of the world’s largest bond fund, Citadel, the US hedge fund, and American International Group, the insurer that the US Government recently bailed out with two loans totalling about $123 billion.
The Times has learnt that the US Treasury has been overwhelmed with requests from executives of other beleaguered sectors who are seeking a similar bailout scheme for themselves. It is thought that representatives from the US car and airline industries have approached the Government for assistance. It is understood that Mr Paulson does not believe that it is his job to help them. Rather, he is intent on addressing the root problems of the financial crisis.
From Patrick .net
Lehman Brothers, the bust investment bank, triggered one of the biggest corporate debt defaults in history yesterday as it emerged that the US Federal Reserve is harbouring grave concerns about whether Washington’s $700 billion (£413 billion) bailout fund will avert a financial meltdown.
An auction of Lehman’s bonds yesterday determined that the bank’s borrowings were worth only 8.625 cents on the dollar. The valuation leaves the insurers of the debt a bill of about $365 billion. It is not clear whether the insurers, which are required to settle the bill in the next two weeks, will be able to pay – a development that could further undermine increasingly stressed capital markets.
The $365 billion default came as stock markets around the world suffered one of their worst days since the crash of 11 years ago. Panicking about the prospect of global recession, the FTSE 100 index of leading shares in London crashed within seconds of opening, losing 8.9 per cent of its value, its worse fall since October 1987.
The index recovered to close down 225 points, marking a 5 per cent decline, but more than a fifth was wiped off London shares this week alone. Issues in New York fluctuated wildly as the Dow Jones industrial average slumped by 312.14 points at lunchtime before closing at 8,451.19, down 128.00. Both markets had been scared by losses in Tokyo, where the Nikkei lost 10 per cent of its value.
Related Links
* Lehman staff will make millions to unwind trades
* Fuld denies responsibility for Lehman collapse
Amid the mayhem across the world’s stock markets, senior Fed officials now doubt whether Washington’s bailout fund will work unless it is launched in some form in the next two weeks.
The Times has learnt that central bankers in America are anxious that if the Treasury is not able to accelerate the speed at which it launches its rescue scheme, it will have no effect. At the moment, the Treasury, which controls the fund, is working to a five-week schedule to get the rescue package up and running. Under present plans, the bailout fund is not expected to buy its first distressed mortgage-backed bonds until after the US elections on November 4.
It is understood that the Fed believes that this will be too late to help the banks that are suffocating under market conditions. Credit markets have frozen up and many banks have been cut off from being able to borrow from one another.
Mr Paulson’s bailout fund is designed to buy up distressed bonds held by troubled banks. This week the former chairman of Goldman Sachs appointed Neel Kashkari, one of his protégés at the Wall Street bank, to run the fund. Mr Kashkari had already been working closely with Mr Paulson during the negotiations over the passage of the “troubled asset relief programme” on Capitol Hill.
Mr Paulson is also considering a range of other forms of financial assistance, which include the Treasury using taxpayer funds to buy stakes in Wall Street banks. Under such a plan, the cash received in return for the shareholding would provide much-needed capital for the banks.
Lehman’s corporate debt default promises to increase the stress across global credit markets. Sean Egan, of the Egan-Jones ratings agency, said: “This is a killer. Lehman said a month ago that it was in terrific shape and now you can’t even get ten cents on the dollar for its debt.
“It underscores the deep structural flaws in our financial system, knocks confidence in the financial markets and raises the cost of capital. It also demonstrates that we are experiencing not only a crisis of confidence, but a crisis.”
About 350 banks and investors are thought to have insured an estimated $400 billion of Lehman’s debt through complex derivatives, known as credit default swaps. These include Pacific Investment Management, the manager of the world’s largest bond fund, Citadel, the US hedge fund, and American International Group, the insurer that the US Government recently bailed out with two loans totalling about $123 billion.
The Times has learnt that the US Treasury has been overwhelmed with requests from executives of other beleaguered sectors who are seeking a similar bailout scheme for themselves. It is thought that representatives from the US car and airline industries have approached the Government for assistance. It is understood that Mr Paulson does not believe that it is his job to help them. Rather, he is intent on addressing the root problems of the financial crisis.
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what are you talking about? Friday was the bottom
chops_a_must
Printing My Own Money
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That's old news.what are you talking about? Friday was the bottom
It was known Friday.
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Paulson's mission is to address the real issue (greed) and conveniently contain it to the banking sector.
Paulson says :
"F*** you guys, we (bankers) are in need of greed more than you."
Glen48
Money can't buy Poverty
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Wayne Swam must of had a talk to GW and decided if this bloke is running the USSA I better get back to Oz and tell Big Kev we are in big trouble and see if we can spend our way out of this mess.
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some interesting snippets from today's daily reakoning:
You will recall, dear reader, that an old Louie lost his head after the debt of France's monarch topped 80% of France's GDP. Seymour Durst put up a 'debt clock' in New York to keep track of the U.S. debt. When he put it up, the U.S. national debt was only $2.7 trillion. That was in 1989. Not even 20 years later and the debt has topped $10 trillion - forcing the owners of the debt scoreboard to add another digit. U.S. gross domestic output is about $13 trillion - and falling. This puts the national debt at 77% of GDP...and rising fast.
..
Our favorite columnist, Thomas L. Friedman, calls this the "post-binge world." We read Friedman to get insights: not as to what is really going on; Friedman has no idea. But Friedman gives voice to popular prejudices; he tells us what the unthinking masses are yearning for.
And here it is:
"This workout promises to be painful, complicated and protracted," he explains. No cause for panic, in other words. It will all be worked out. Then, he offers more reassurance, quoting the calming words of the world's richest man:
"I have no idea what the stock market is going to do next month or six months from now," said Warren Buffett on Friday. "I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well."
The Sage of the Plains did not reveal how he knows these things. Maybe he is right; maybe he isn't. But here at The Daily Reckoning we've urged readers to panic out of U.S. assets for a long time. And now, readers are advised to stay in panic mode...and sell into the coming rally.
...
--The optimistic view is that it already HAS decided and stocks are clear to rally from here. But keep in mind, earnings analysts have yet to downgrade their expectations for the next two quarters. When they do, shares could head lower. In fact, we believe the market (here and in the U.S.) will eventually test the 2003 lows. But it may not happen just net.
--Please remember what the job of the Bear is. His aim is to destroy your capital. But he can only do so if you're willing to stay in the market and keep your capital at risk. In the last week, fear and panic were so prevalent that there were no buyers in the market. Capital fled, indices fell and the marketplace was deserted of bulls.
--The Bear's job now is to sucker you back in, to make you think the worst is over and that this is a rally you can't afford to miss. He does that by giving you a rally that seems convincing. A rally you can't resist. But take a look at the two charts below.
The Crash of '29: 49% in less than a month
A 52% Rally and then an 86% Fall
--After the '29 Crash the bear got clever. Between November of 1929 and April of 1930, the market zoomed up 52% in just five months. It didn't make a new high. But the price action was surely enough to sucker many investors back in, believing the worst was over. It wasn't. Over the next two years, stocks fully priced in the debt deflation in the economy and fell 86%.
--This is precisely the scenario the Fed wants to prevent. It's willing to risk a hyperinflationary melt-up in order to avoid prolonged debt deflation. We just don't know, historically, what the result will be. So how should you handle it?
--Be ready for a strong rally in Aussie stocks that could carry through past more interest rate cuts from the RBA this month and the U.S. election in November. It may even last through the end of this year and into early next. We don't expect stocks to make a new high. But a similar rally to the post-'29 crash would put the All Ords at about the same level they were in May of this year.
--Is it tradeable? You bet.
You will recall, dear reader, that an old Louie lost his head after the debt of France's monarch topped 80% of France's GDP. Seymour Durst put up a 'debt clock' in New York to keep track of the U.S. debt. When he put it up, the U.S. national debt was only $2.7 trillion. That was in 1989. Not even 20 years later and the debt has topped $10 trillion - forcing the owners of the debt scoreboard to add another digit. U.S. gross domestic output is about $13 trillion - and falling. This puts the national debt at 77% of GDP...and rising fast.
..
Our favorite columnist, Thomas L. Friedman, calls this the "post-binge world." We read Friedman to get insights: not as to what is really going on; Friedman has no idea. But Friedman gives voice to popular prejudices; he tells us what the unthinking masses are yearning for.
And here it is:
"This workout promises to be painful, complicated and protracted," he explains. No cause for panic, in other words. It will all be worked out. Then, he offers more reassurance, quoting the calming words of the world's richest man:
"I have no idea what the stock market is going to do next month or six months from now," said Warren Buffett on Friday. "I do know that the American economy, over a period of time, will do very well, and people who own a piece of it will do well."
The Sage of the Plains did not reveal how he knows these things. Maybe he is right; maybe he isn't. But here at The Daily Reckoning we've urged readers to panic out of U.S. assets for a long time. And now, readers are advised to stay in panic mode...and sell into the coming rally.
...
--The optimistic view is that it already HAS decided and stocks are clear to rally from here. But keep in mind, earnings analysts have yet to downgrade their expectations for the next two quarters. When they do, shares could head lower. In fact, we believe the market (here and in the U.S.) will eventually test the 2003 lows. But it may not happen just net.
--Please remember what the job of the Bear is. His aim is to destroy your capital. But he can only do so if you're willing to stay in the market and keep your capital at risk. In the last week, fear and panic were so prevalent that there were no buyers in the market. Capital fled, indices fell and the marketplace was deserted of bulls.
--The Bear's job now is to sucker you back in, to make you think the worst is over and that this is a rally you can't afford to miss. He does that by giving you a rally that seems convincing. A rally you can't resist. But take a look at the two charts below.
The Crash of '29: 49% in less than a month
A 52% Rally and then an 86% Fall
--After the '29 Crash the bear got clever. Between November of 1929 and April of 1930, the market zoomed up 52% in just five months. It didn't make a new high. But the price action was surely enough to sucker many investors back in, believing the worst was over. It wasn't. Over the next two years, stocks fully priced in the debt deflation in the economy and fell 86%.
--This is precisely the scenario the Fed wants to prevent. It's willing to risk a hyperinflationary melt-up in order to avoid prolonged debt deflation. We just don't know, historically, what the result will be. So how should you handle it?
--Be ready for a strong rally in Aussie stocks that could carry through past more interest rate cuts from the RBA this month and the U.S. election in November. It may even last through the end of this year and into early next. We don't expect stocks to make a new high. But a similar rally to the post-'29 crash would put the All Ords at about the same level they were in May of this year.
--Is it tradeable? You bet.
what are you talking about? Friday was the bottom
Now that we've all had a good laugh, what do you really think?
There's no way to avoid giving the 2002-3 lows a good test -- that's around 800 on the S&P500. And if that doesn't hold, what next?
This sucker is broken but good. There's way too much bad news not priced in yet.
Sean K
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I'm not sure how much more bad news is or isn't factored in, but the recent falls were obviously overdone in the short term, and thus the rebound. It even looked like capitulation low to me.
I'm not sure if you can absolutely say how much is factored in either davo.
When you say the 'sucker is broke', are you saying the entire financial system is going to break down and be replaced by something else? Or, just that there will be a lower low? As you asked, sub 800 on the S&P and what next?
Sean K
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Following the problems in the sub-prime lending market in America and the recent problems with Banks in the UK, uncertainty has now hit Japan. In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut back some branches. Yesterday it was announced that Karaoke Bank is up for sale and will probably go for a song. Also today, shares in Kamikaze bank were suspended after they nose-dived. The Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that the staff may get a raw deal....!
chops_a_must
Printing My Own Money
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Already posted it in this thread I think Kennas.
Sean K
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Damn it!!Already posted it in this thread I think Kennas.
chops_a_must
Printing My Own Money
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Not directed at you Kennas my man.
More on behalf of Rob Grubb for the contestant, in the markets:
Bow bow.
More on behalf of Rob Grubb for the contestant, in the markets:
Bow bow.
GreatPig
Pigs In Space
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I think I've seen that posted 5 or 6 times in different places now.
GP
GP
Experts always said the decline in the Nikkei could never be considered a model for the US because Japan had weak banks with dodgey balance sheets-sound familiar? As Japan has no interest rate(stagflation) and my guess that they pay next to nothing in div's, in real terms they are down lot more.
But it could never happen in the US- right?
But it could never happen in the US- right?
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Correct me if I'm wrong, but I'm under the impression that one of the conditions for the public debt bank bailouts/buyouts in the UK is that NO DIVIDENDS will be paid to shareholders of those banks UNTIL the public debt is repaid?
If that is so, surely that is going to mean long term dis-interest by local and international investors in those banks affected? I always thought one of the big attractions of the banks was their regular & relatively large (in percentage terms) and "safe" dividends?
Am I missing something here?
aj
If that is so, surely that is going to mean long term dis-interest by local and international investors in those banks affected? I always thought one of the big attractions of the banks was their regular & relatively large (in percentage terms) and "safe" dividends?
Am I missing something here?
aj
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that's it as i understand it also aj, so yes hard to fathom how it helps the banks wrt the ordinary shareholder interests
Whoa! Whilst we knew that US economic data was going to get worse in September even today's retail sales numbers took the most pessimistic by surprise registering their first year over year decline since Oct 2002. On another note the Empire State Manufacturing survey fell to a new record low of -24.6.
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